Gold prices surged back above the US$5,000 per ounce mark this week as softer U.S. inflation data boosted expectations that the Federal Reserve may begin cutting interest rates later in 2026, lifting investor sentiment and renewing appetite for the precious metal. Traders reacted to the January Consumer Price Index (CPI) reading, which showed inflation easing to around 2.4% year‑on‑year, by pushing Treasury yields lower and reducing the opportunity cost of holding a non‑yielding asset like gold.
Spot gold climbed above US$5,000 an ounce during trading following the inflation print, reversing a recent sell‑off that briefly pushed prices below that key psychological level. The rebound reflects a broader trend of renewed safe‑haven demand amid uncertainty about the future path of U.S. policy and global economic prospects.
Market analysts say the soft inflation report strengthened trader bets on multiple Fed rate cuts this year, as slower price growth gives the central bank greater room to ease monetary policy. Lower interest rates typically weaken the U.S. dollar and drive investors toward alternative stores of value like gold, supporting its appeal during periods of lower yields and heightened volatility.
Despite the volatile price swings, gold’s ability to reclaim $5,000 underscores the metal’s resilience as a hedge against inflation and uncertainty. Investors are also watching broader economic indicators, including forthcoming CPI and employment data, for further clues on how quickly and deeply the Fed might pivot toward easing.
Gold’s rally this year has been supported not only by monetary policy expectations but also by geopolitical tensions, central bank buying and continued strong demand from institutional and retail investors. As markets price in the possibility of at least one or more rate cuts this year, gold’s safe‑haven status has come sharply into focus, even as short‑term volatility persists.
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